**Exhibit 10.4**

 

**EMPLOYMENT AGREEMENT**

 

THIS AGREEMENT is made and entered into as of the 20thday of May, 2005, by and between Morning Pride Manufacturing L.L.C., a Delawarelimited liability company (“**Employer**”), andWilliam Grilliot (“**Employee**”).

 

THIS AGREEMENT will become effective only upon theclosing of the transactions contemplated by that certain Purchase and SaleAgreement dated May 20, 2005 by and among NSP Holdings L.L.C., NorcrossSafety Products L.L.C. and Safety Products Holdings, Inc.;

 

WHEREAS, Employer is engaged in the manufacture, saleand service of turnout gear and other ancillary firefighter protective clothing(the “**Business**”);

 

WHEREAS, Employer and Employee previously entered intoan Employment Agreement dated as of July 1, 1998; and

 

WHEREAS, Employer and Employee now wish to revise theterms and conditions of Employee’s employment.

 

NOW, THEREFORE, in consideration of the premises andpromises contained herein, the parties agree as follows:

 

**1.****                                      Employment**.  Employer shall continue to employ Employee,and Employee shall continue in employment with Employer, as President ofEmployer to perform such duties and services of an executive and administrativecharacter as shall be assigned to him from time to time by the Chief ExecutiveOfficer of Employer (the “**CEO**”),including managerial functions in the areas of planning, new products,marketing and production.  The initialterm of this Agreement shall be for three (3) years from the date hereofand shall renew automatically for successive one-year terms unless Employerdelivers to Employee written notice of its intention not to renew at least onehundred and eighty (180) days before the end of the then current term.

 

**2.****                                      Performance**.  Employee agrees to devote his best efforts,energies and skills on a full time basis during normal working hours toperformance of his duties hereunder (except for vacations and reasonableperiods of illness or incapacity).

 

**3.****                                      BaseSalary**.  For all duties to beperformed by Employee hereunder, Employee shall receive an annual base salary(the “**Base Salary**”) of One Hundred Seventy-SevenThousand Five Hundred Dollars ($177,500), payable by Employer in equal weeklyinstallments (prorated for any partial calendar year).  The Base Salary shall be subject to periodic adjustment,as determined by Employer’s Board of Managers, in its sole discretion.  In no event, however, shall Base Salary bedecreased below Base Salary as of the date hereof.

 

**4.****                                      Bonus**.  In addition to his Base Salary, Employeeshall be entitled to receive an annual bonus (the “**Bonus**”)for each full fiscal year of his employment hereunder.  The Bonus, which shall be determined in thesole discretion of Employer shall have a target level of forty

 

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percent (40%) ofEmployee’s Base Salary.  The Bonus shallbe based on targeted EBITDA and Working Capital or other such financialcriteria as may be determined by the Board, within 30 days after the budget forNorcross Safety Products L.L.C. has been determined.  Targets for annual criteria will be subjectto approval by the Board.

 

**5.****                                     ****Equity.**   Employee shall be entitled to a grantof [non-qualified stock options] [restricted stock] under the [Norcross SafetyProducts L.L.C. Management Equity Program (the “Equity Program”)] on            ,2005, equal to [  ] percent of the Norcross Safety Products L.L.C.’sfully diluted equity [at an exercise price of $      per share].  The Equity shall be subjectto all the terms and conditions of the Equity Program and such terms andconditions, including vesting, as set forth in the applicable award agreement.

 

**6.****                                      Vacationand Leave**.  Employee shall beentitled to fifteen (15) business days annual paid vacation, which may be takenat such times as are consistent with good business practices.  Employee shall be entitled to carryoverunused vacations days from one year until the end of the first quarter of thenext year.  Any vacation time which iscarried over but not used by the end of the following year’s second quartershall be forfeited.

 

**7.****                                      EmployeeBenefits**.  Employee shall beentitled to receive the employee benefits set forth on Exhibit A tothis Agreement, which benefits shall be substantially similar to those receivedby employees of Morning Pride Manufacturing, LLC immediately prior to theexecution of this Agreement.  Inaddition, Employer shall provide Employee with a monthly automobile allowanceof $700.00 (the “**Allowance**”).  The Allowance shall be used to pay for allEmployee’s automobile expenses (including car or lease payments, licensing,repair, maintenance, gasoline, insurance, tires and parking garage fees) inconnection with Employee’s fulfillment of his duties under this Agreement.  Employer further agrees that followingtermination of Employee’s employment hereunder (so long as such termination isnot for cause (as defined hereafter)), it shall provide Employee with thecomputer system (consisting of the CPU, monitor, attached (non-networked)printer and other relevant peripherals) he was using immediately prior to suchtermination.  Employee shall also receiveall software applications and files contained on such computer other than thosesoftware applications and files related to the Business.

 

**8.****                                      NewDevelopments; Confidentiality**.

 

8.1.                              Allof Employee’s designs, programs, methods, inventions, improvements,modifications, applications, discoveries and writings related to:  (a) the Business; (b) the subject ofEmployee’s work for Employer; (c) products, projects or business ofEmployer of which Employee had knowledge, whether acquired in the course ofEmployee’s work or otherwise; or (d) any business of Employer duringEmployee’s employment shall be herein referred to as “**NewDevelopments**”.  Employeeacknowledges that all such New Developments and the results of all workperformed are the exclusive property of Employer and, to the extent permissibleunder applicable law, hereby assigns all right, title and interest in and tosuch New Developments to Employer.  Employeewill cooperate with Employer in the procurement and defense of any patent,trademark or copyright protection in respect of any New Developments

 

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8.2.                              Employeeacknowledges that certain of the information, observations and data relating toEmployer and its Affiliates, or their business, products or services, which hepossesses or has obtained knowledge of or will possess or obtain knowledge ofas an employee or equityholder of the Employer and/or its Affiliates is andwill be the confidential and proprietary property of Employer and its Affiliates(“Confidential Information”). Employee agrees that he shall not, directly or indirectly, use for hisown purposes or use for or disclose to any third party any of such ConfidentialInformation without the prior written consent of Employer, unless and to theextent that the aforementioned matters (i) become generally known to andavailable for use by the public other than as a result of Employee’s acts orfailures to act, or (ii) Employee is required by order of a court ofcompetent jurisdiction (by subpoena or similar process) to disclose anyConfidential Information (provided that in such case, Employee shall promptlyinform Employer of such order, shall cooperate with Employer at Employer’sexpense in attempting to obtain a protective order or to otherwise restrictsuch disclosure, and shall only disclose Confidential Information to theminimum extent necessary to comply with any such court order).

 

For purposes of hereof, the term “Affiliate” means anyan individual, partnership, corporation, limited liability company,association, joint stock company, trust, joint venture, or other organization,whether or not incorporated, that directly or indirectly controls, iscontrolled by, or is under common control with Employer.

 

**9.****                                      CovenantsNot to Compete or Solicit**.

 

9.1.                              Solong as Employee is employed by Employer and for a period of eighteen (18) monthsthereafter, Employee shall not, directly or indirectly, by or for himself or asthe agent of another or through others as his agent:

 

(a)                                  manufacture,distribute, sell or service anywhere on the planet Earth (the “**Territory**”) products or processes in existence or underdevelopment, which are similar to or in competition with those of Employer;

 

(b)                                 own,manage, operate, be compensated by, participate in, render advice to, have anyright to or interest in any other business directly or indirectly engaged inthe design, production, sale or distribution of products competitive with thoseof Employer or affiliates of Employer anywhere in the Territory;

 

(c)                                  divulge,communicate, use or disclose any nonpublic information concerning Employer, itspersonnel, business and affairs;

 

(d)                                 interferewith the business relationships or disparage the good name or reputation ofEmployer; or

 

(e)                                  makeany public statements or publish or participate in the publication of anyaccounts or stories relating to Employee’s employment with Employer or thetermination thereof.

 

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9.2.                              Solong as Employee is employed by Employer and for a period of eighteen (18)months thereafter, Employee shall not (except in connection with the renderingof services hereunder), directly or indirectly, by or for himself, or as theagent of another, or through other as his agent:

 

(a)                                  solicitor accept any business from customers or suppliers of Employer, or request,induce or advise customers or suppliers of Employer to withdraw, curtail orcancel their business with Employer;

 

(b)                                 solicitfor employment or employ or become employed by any past, present or futureemployee of Employer (other than Mary Grilliot or any of Employee’s children),or request, induce or advise any employee to leave the employ of Employer; or

 

(c)                                  useor disclose the names and/or addresses of any customer, supplier or employee ofEmployer to any person for any purposes whatsoever.

 

9.3.                              IfEmployee violates the provisions of this Section 9, Employer shall not, asa result of the time involved in obtaining relief, be deprived of the benefitof the full period of the restrictive covenant.

 

9.4.                              Employeeagrees that, if he shall violate any of the provisions of this Section 9,Employer shall be entitled to an accounting and repayment of all profits,compensation, commission, remuneration or other benefits that Employee,directly or indirectly, may realize arising from or related to any suchviolation.  These remedies shall be inaddition to, and not in limitation of, any injunctive relief or other rights towhich Employer may be entitled

 

9.5.                              Theparties agree and acknowledge that the duration, scope and geographic areasapplicable to the covenant not to compete described in this Section 9 arefair, reasonable and necessary, that adequate compensation has been received byEmployee for such obligations, and that these obligations do not preventEmployee from earning a livelihood.  If,however, for any reason any court determines that the restrictions in this Section 9are not reasonable, that consideration is inadequate or that Employee has beenprevented from earning a livelihood, such restrictions shall be interpreted,modified or rewritten to include as much of the duration, scope and geographicarea identified in this Section as will render such restrictions valid andenforceable.

 

**10.****                               Remedies**.  Employee acknowledges that he has carefullyread and considered the terms of this Agreement and knows them to be essentialto induce Employer to enter into this Agreement and that any breach of theprovisions contained herein will result in serious and irreparable injury toEmployer.  Employee further acknowledgesthat Employer’s business interests protected hereby are substantial andlegitimate.  Therefore, in the event of abreach of any such provisions, Employer shall be entitled to equitable reliefagainst Employee by way of injunction (in addition to, but not in substitutionfor, any and all other relief to which Employer may be entitled at law or inequity) to restrain Employee from such breach and to compel

 

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compliance byEmployee with his obligations hereunder. Employer shall also be entitled to seek a protective order to ensure thecontinued confidentiality of its trade secrets and proprietary information.  Employee hereby waives any requirement ofproof that such breach will cause serious or irreparable injury to Employer, orthat there is an adequate remedy at law. In any proceeding, either at law or in equity, between the partieshereto, it is hereby agreed that Employee shall not raise as a defense (i) thatany information relating to the Business is not confidential, (ii) thatthe period of time or geographical area in which Employee is prohibited fromcompetition is unfair, unnecessary or unreasonable, or (iii) that thisAgreement is in restraint of trade.  Further,the existence of any claim or cause of action of Employee against Employer orany of its Affiliates, whether or not predicated on the terms of thisAgreement, shall not constitute a defense to the enforcement of Employee’sobligations under this Agreement.  Employeeshall pay or reimburse Employer for all costs and expenses, including courtcosts and reasonable attorneys’ fees incurred or paid by Employer in protectingor enforcing its rights and remedies hereunder.

 

**11.****                               Termination**.

 

11.1.                        **Death**.  In the event of the death of Employee duringthe term hereof, Employee’s employment under this Agreement shall terminate asof the end of the month in which Employee dies.  In addition to any benefits under anyinsurance, retirement or other plan of Employer for Employee, Employer shallpay within thirty (30) days of the date of death to Employee’s legalrepresentatives the sum of (i) any unpaid Base Salary through the date oftermination, (ii) accrued and unpaid vacation pay, and (iii) anyunreimbursed expenses incurred by Employee on Employer’s behalf.  Items (i) through (iii) arehereinafter referred to as the “**Termination Payments**”.

 

11.2.                        **Disability**.  If, during the term of this Agreement,Employee comes under such illness, physical or mental disability or otherincapacity that the Board of Managers of Employer determines that he is unableto perform his duties under this Agreement for a period in excess of sixty (60)substantially consecutive days or nonconsecutive periods aggregating more than120 days within any six-month period, exclusive of Saturdays, Sundays, holidayor days on which Employee was on vacation, Employer may terminate Employee’semployment under this Agreement by giving notice to Employee of its intentionto terminate due to disability and such employment shall terminate as of theend of the month following the month in which such notice was given.  In the event of such termination, Employershall pay the Termination Payments to Employee within thirty (30) days of suchtermination.

 

11.3.                        **Termination by Employer Without Cause orResignation by Employee with Good Reason**.  Employer may terminate Employee’s employmentunder this Agreement without cause in accordance with Employer’s policies andprocedures.  In the event of suchtermination without cause or resignation by Employee with Good Reason (asdefined below), Employer shall, for the period of eighteen months followingsuch termination or resignation, pay Employee the Employee’s Base Salary as ofsuch termination date, and Employee shall be bound by Section 9 hereof.

 

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For purposes hereof, theterm “**Good Reason**” means Employee’sresignation as a direct result of (i) a substantial diminution of hisresponsibilities, duties or authorities, as compared to his responsibilities,duties and authorities prior to such diminution (which may include a requestedrelocation of Employee by Employer); (ii) a reduction of his perquisites,including the office facilities and support staff provided to him prior to suchreduction; (iii) a relocation of the Business to an area more than fifty(50) miles from its current location; or (iv) a material breach of thisAgreement by Employer, which diminution, reduction, relocation or breach is notcured within thirty (30) days after written notice by Employee to Employer.  The burden of proof as to whether any suchevent constitutes Good Reason for purposes of this Section 11 shall be onEmployee.

 

11.4.                        **Resignation Without Good Reason**.  Employee shall have the right to terminatehis employment under this Agreement at any time upon thirty (30) days’ priorwritten notice to Employer.  If suchresignation is without Good Reason, Employer shall pay the Termination Paymentsto Employee within thirty (30) days of such termination.  Employee shall be bound by the covenant notto compete contained in Section 9 hereof.

 

11.5.                        **Termination for Cause**.  Notwithstanding any other provision hereof.  Employer may terminate Employee’s employmentunder this Agreement without prior notice at any time for cause.  The termination shall be evidenced by writtennotice thereof to Employee, specifying the cause for termination.  Such termination may only occur upon adetermination by the Board of Managers of Employer that in its good faith andjudgment, cause exists for termination of Employee’s employment.  For purposes hereof, the term “**cause**” shall include, without limitation, commission of amaterial act of dishonesty, fraud or deceit; embezzlement or misappropriationof Employer funds; conviction of a felony involving moral turpitude; habitualor willful neglect of duties; breach of any fiduciary duties to Employer or itsAffiliates involving personal profit; a breach of any material representationsof this Agreement or any other agreement with the Employer or its Affiliates;and a material violation of any other duty imposed by Employer’s Board ofManagers or by law, to Employer, its Affiliates or any of their shareholders.  The term “**cause**”shall also include the failure of Employee for any reason, after receipt byEmployee of written notice thereof from Employer, to correct, cease orotherwise alter any insubordination, failure to comply with instructions, orother action or omission to act that in the opinion of Employer may adverselyaffect its business or operations.  Theburden of proof as to whether any act or omission constitutes cause forpurposes of this Section 11.5 shall be on Employer.  In the event of such termination, Employershall pay the Termination Payments to Employee within thirty (30) days of suchtermination. Employee shall be bound by the covenant not to compete containedin Section 9 hereof.

 

11.6.                        **Effect of Termination**.  Upon a termination of employment under thisAgreement, all obligations of Employer and rights of Employee under this Agreementshall cease, except as otherwise provided herein.  Notwithstanding anything to the contrarycontained herein, the provisions of Sections 8 through 10 shall survive anytermination of employment under this Agreement and shall remain in full forceand effect.

 

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**12.****                               Arbitration**.  Any controversy or claim arising out of orrelating to this Agreement, or any breach thereof, shall be settled byarbitration in accordance with the commercial arbitration rules of theAmerican Arbitration Association, and judgment upon the award rendered by thearbitrator(s) may be entered in any court having jurisdiction thereof.  The arbitration shall be conducted in Dayton,Ohio, and the decision of the arbitrator(s) shall be conclusive and bindingupon the parties hereto.  Employer shallpay on a current basis all legal expenses (including reasonable attorneys’fees) incurred by Employee in connection with such arbitration and the enteringand enforcement of such award.

 

**13.****                               Notice**.  All notices, requests, consents, demands andother communications hereunder must be in writing and shall be personallydelivered, sent by overnight carrier (such as Express Mail, Federal Express,etc.) with a delivery receipt obtained or sent by facsimile transmission withconfirming copy sent by overnight carrier and a delivery receipt obtained andaddressed to the intended recipient as follows:

 

ToEmployee:

 

WilliamGrilliot

6577Rangeline Road

WestMilton, Ohio 45383

 

With acopy to:

 

Schottenstein,Zox & Dunn

41South High Street, Suite 2600

Columbus,Ohio 43215

Fax:  (614) 462-2700

Attn:  John C. McDonald and Robert R. Ouellette

 

ToEmployer:

 

MorningPride Manufacturing L.L.C.

1136Second Street

P.O. Box7208

RockIsland, Illinois 61204-7208

Facsimile: (309) 786-6923

 

or at such other addressas either party may provide to the other in writing for the stated purpose ofreceiving notices.  Notice given asaforesaid shall be sufficient service thereof and shall be deemed given uponreceipt or refusal of delivery.

 

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**14.****                               Successorsand Assigns**.  If Employer shallat any time be merged or consolidated into or with any other corporation, or ifsubstantially all of the assets of the company are transferred to anothercorporation or party, the provisions of this Agreement shall be binding uponand inure to the benefit of the entity or successors resulting from such mergeror consolidation or to which such assets shall be transferred; and thisprovision shall apply in such event

 

14.1.                        To theextent applicable, this Agreement shall be binding on and inure to the benefitof the successors and assigns, devises, heirs, next of kin, executors andadministrators of Employee

 

14.2.                        Except asprovided in this Section, neither party hereto may transfer or assign itsrights or interests under this Agreement without the other party’s priorwritten consent.

 

**15.****                               ApplicableLaw**.  This Agreement shall begoverned by and construed in accordance with the internal substantive laws ofthe State of Illinois.

 

**16.****                               Headings**.  The headings in this Agreement are forconvenience of reference only and shall not limit or otherwise affect themeaning hereof.

 

**17.****                               EntireAgreement**.  This Agreementcontains the entire agreement of the parties in regard to the subject matterhereof supersedes all prior discussions, agreements and understandings of everykind between the parties and may be changed only by a written document signedby the party against whom enforcement of any waiver, change, modification,extension or discharge is sought.  Thewaiver of any breach of any provision of this Agreement shall be effective onlyin the specific instance and for the specific purpose for which given and shallnot operate or be construed as a waiver of any subsequent breach hereof.

 

**18.****                               Severability**.  If any provision of this Agreement shall beprohibited by or invalid under applicable law, or otherwise determined to beunenforceable, such provision shall be ineffective to the extent of suchprohibition or invalidity without invalidating the remainder of such provisionor the remaining provisions of this Agreement.

 

**19.****                               Attorneys’Fees**.  Each party shall beresponsible for paying its own attorneys’ fees in respect of the preparationand negotiation of this Agreement.

 

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IN WITNESS WHEREOF, the parties have caused thisAgreement to be executed as of the date first written above.

 

 
| EMPLOYEE:             | EMPLOYER:                           |
|-----------------------|-------------------------------------|
|                  | Morning Pride  Manufacturing L.L.C. |
|                  |                                |
| /s/ William  Grilliot |                                | /s/ Robert A.  Peterson |   |
| William Grilliot      | Robert A.  Peterson                 |
|                  | Title: Chief  Executive Officer     |
|                       |                                     |  |  |

 

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**Exhibit A**

 

**Employee Benefits**

 

1.                                       NormalMorning Pride Manufacturing, L.L.C. benefits as defined in the Company Rules &Regulations.

 

2.                                       PhoenixHome Life Policies on Employee.

 

3.                                       Universityof Dayton Ticket and Seating Program.

 

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